The fossil fuel industry is heavily subsidized for good reason. Globally, this totals $500 billion worth of subsidies to keep the cost of oil, gas and coal low. If subsidies were to rapidly diminish, households would be forced to bear the true cost of heating their homes, driving their cars and powering their lifestyles. It would cause global mayhem and affect the poorest households most, who are already living on shoestring budgets.
There is a benefit to subsidization, especially in the energy sector. We need energy and we need it to be affordable. We also need it to be clean and healthy for our communities to use.
Oil, gas and coal have an externality that affects us all. Emissions. Not only do they hurt our health, especially in Utah’s inversion months, but they also have negative externalities that go beyond our local communities. This includes national security (there’s a reason the U.S. military considers climate change a “threat multiplier”), a globalized economy we are reliant on and an unpredictable climate that will cost us billions in natural disaster emergencies, cleanup, and rebuilding.
So how do we go about eliminating these issues and how might we go about funding the progress needed to make it happen?
Carbon pricing is not a new idea. It has been a discussion economists have been having for some time and a policy that has been enacted in several countries around the world. We need to make the transition to renewable energy happen quickly, but most importantly, affordably. Solar, wind, small hydro, and geothermal, to name a few, have the ability to power our economy in a clean and healthier way than 20th century fossil fuels do.
We live in a world of technological advancement and progress. The next most logical step makes sense to also modernize where we get our energy. Renewable energy will improve our air quality, economy, and communities. Renewables reduce our reliance on foreign governments and give us the ability to own and produce our energy locally, if not right on-site. The technology has become a viable option and has reached the efficiency levels of fossil fuels.
The true cost of fossil fuels will continue to rise as the ability to reach and extract the best oil, gas and
coal is only going to become more complex, difficult and costly, whereas the cost of renewables will decrease as we scale the technology through deployment. We need to help spur the growth of renewables now, even as the cost may be higher. We can do what we have done for so long in the energy sector, subsidize it. How do we go about doing this?
Enter carbon pricing.
By setting a price on carbon we can fund our energy future. A carbon fee and dividend bill has already been discussed, the idea being we charge a fee to the highest carbon users, in an effort to reduce fossil fuel use, and pay a dividend out to the American people. Alternatively, rather than spurring market growth through a check to the people, similar to the stimulus checks we received, why not put the money directly into investment of our own energy? This will spur rapid development, create new U.S.-based jobs, and ensure our energy needs are met in a healthier manner. A carbon fee can subsidize renewable energy investment and save the American people on energy costs by owning their own locally produced power.
Let’s create healthier more resilient communities through subsidizing not fossil fuels, but renewable energy. Power to the people!
Tom Magnuson
Salt Lake City